Obama Blasts Private Jet Tax Breaks Included in His Own Stimulus

The chief economic culprit of President Obama’s Wednesday press conference was undoubtedly “corporate jets.” He mentioned them on at least six occasions, each time offering their owners as an example of a group that should be paying more in taxes.

“I think it’s only fair to ask an oil company or a corporate jet owner that has done so well,” the president stated at one point, “to give up that tax break that no other business enjoys.”

But the corporate jet tax break to which Obama was referring – called “accelerated depreciation,” and a popular Democratic foil of late – was reauthorized by his own stimulus package.

Proponents of the tax break lauded it as a means to spur economic activity by encouraging purchases of large manufactured goods (planes). So the president’s statement today – and his call to repeal that tax break generally – is either a tacit admission that the stimulus included projects that did not, in fact, stimulate the economy, or an attempt to “soak the rich” without regard for the policy’s effects on the economy.

For many Americans, those effects could be dramatic. Cessna and Gulfstream have facilities in a combined 15 cities nationwide (and another four abroad). A significant decline in consumption of private jets would undoubtedly have adverse effects on at least some of those local economies. Given the sizable bump in consumption that the initial tax break yielded, its repeal would likely have that economic domino effect.

Just a few months after lawmakers scolded auto executives for flying to Washington in private jets, Congress approved a tax break in the stimulus package to help businesses buy their own planes.

The incentive — first used to help plane makers recover from the 2001 terror attacks — sharply reduces the up front tax bill for companies who buy assets like business planes.

The aviation industry, which is cutting jobs as it suffers from declining shipments and canceled orders, hopes the tax break in the economic-stimulus bill just signed by President Barack Obama will persuade more companies to buy planes and snap a slump in general aviation that began last year.

“This is exactly the type of financial incentive that should be included in a stimulus bill,” said Rep. Todd Tiahrt, R-Kan., in an interview. His state lost at least 6,900 jobs at Cessna and Hawker Beechcraft, both based in Wichita.…

The incentive — known as accelerated depreciation — lets companies take a larger deduction in the early years of the life of an asset such as a plane.

Companies will have to place orders by the end of 2009, and those planes will need to be delivered by the end of 2010 to take advantage of the tax benefit.

First used in the months following 9/11, an industry study found accelerated depreciation helped boost sales by 43 percent, and later contributed an additional $2 billion in sales when implemented again in 2003.

UPDATE: Corrections made to headline and third paragraph to note the reauthorization of the tax break in Obama’s economic stimulus package. Heritage’s Mike Gonzalez has written a response about White House criticism of this story.

If it was planned as a short term stimulus, why wasn't a sunset date put in the original bill? Then purchasers of these large manufactured goods would be able to make a proper economic judgment as to whether or not they thought the incentive was worth it.
This is just another example of Obama not having a clue as to how the economy works.

So now that companies have purchased the jets you and Obama want to retroactively change the rules proving once again that libs are not to be trusted. Do you even understand that all accelerated depreciation does is defer the paying of taxes to a later point? It's not a bailout or a tax reduction at all.

To be honest, I think it's worse than you suspect. It seems to me as though the president's intent, having already reaped whatever benefit the breaks offered to the economy by encouraging the purchase of corporate jets with the promise of the accelerated depreciation benefit, would now like to pull that benefit back before the intended beneficiaries have had a chance to fully utilize it. He's double-dealing.

To be honest, I think it's worse than you suspect. It seems to me as though the president's intent, having already reaped whatever benefit the breaks offered to the economy by encouraging the purchase of corporate jets with the promise of the accelerated depreciation benefit, would now like to pull that benefit back before the intended beneficiaries have had a chance to fully utilize it. He's double-dealing.

I'd like to know what stealing money is going to do specifically to grow the economy? SPECIFICS!!!!!

Seems the opportunity to prosper in America is really what's being removed to result in bigger government!!!!! The only sound answer with fact in result, is reducing government and REDUCING ALL IT'S EXPENSES WILL grow the economy!!!!!

Good question, actually, but not the way you meant it. I recently bought a new computer for my business. Why shouldn't the IRS let me write it off immediately as a business expense? I paid for it all at once, and my money is gone. Why should I have to depreciate it over a period of years? The government is actually screwing me by not giving me credit for a legitimate business expense until it has a chance to further inflate the currency. Duh yourself.

Accelerated depreciation does not typically spur additional purchases. The reason for the spike is, companies that were considering buying assets accelerated them in order to take advantage of the favorable taxes. If the bonus depreciation stays in place, the volume of purchases will eventually revert back to whatever it would have been otherwise, a few exceptions noted.

Wrong. Dems specifically called out this enhanced depreciation as one of the sticking points in ongoing negotiations with Republicans – and we all know all Dems work from the same mantra list. But nice try. Oh, how's the kool aid?

"Actually this specific thing Obama is talkin about is from a 1987 provision in the tax code. But nice try"

Really? Wow, then someone should tell the White House!

Not so, said the White House (Daniel Pfeiffer). The tax break in question was created in 2002 and merely extended by President Obama.

So he whines 6 times about a tax break HE extended?
In 2009 when Dems had a Supper Majority in the Senate and a 59% majority in the lower house?

Daniel Pfeiffer said “corrects @Heritage’s claim that the Dems created the private jet loophole that the GOP refuses to close.”

“the GOP refuses to close”
In 2009? How could the GOP refuses to close this loop hole when the GOP was excluded from negotiations?
As I recall the GOP protested the vote because none of them had read it, knew what was in it, as it had just been written hours before behind closed doors!

There is so much political hyperbole, hypocricy and obfuscation surrounding this issue that no one seems to have the full picture. The "Economic Stimulus Act of 2008" amended IRS 168(k) to "allow a 50% additional first year depreciation deduction " (IRS Bulletin 2008-44) and increased Section 179 expensing from $125K to $250K, raising the cap to $800K. At the time, the democrats hailed it as the salvation of the aviation and other big equipment industries (and their union labor). (the deadline accelerated some purchases, and does tip things in the direction of new vs. used, but only changes the timing of the depreciation, not the total amount.) Now, the 50% deduction in first year is something we'd seen before, but the real new rule was introduced in Obama's famous bipartisan agreement, H.R. 4853 "Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act" which contained Title IV – Temporary Extension of Investment Incentives which extended the Bonus Depreciation on qualified property (including corporate jets) until 2014 and raised the first year deduction from 50% to ONE HUNDRED PERCENT. ( HR 4853 Title IV Sect 401 (a) (1)-(5) ). And now Obama wants to claim that Republicans want to use "as a gun against the heads of the American people to extract tax breaks for corporate jet owners or oil and gas companies that are making billions of dollars."

Always lies and hypocrisy coming from this president. I yell at my radio when he speaks because he infuriates me. If Boehner had the guts to do so, he should look Obama in the eye and dare him to ask for all of the cuts that he threatened. While we're at it add NPR, PBS, Planned Parenthood, Shrimp Without Treadmills, and all studies that has to do with beer, college women menstruating, and drunk foreign prostitutes. That's just for starters.

At least you can stand to listen to him, his lisp drives me nuts. I just read about what he said later. Can't stand to see his arrogant body language and total disdain for the taxpayer, but it comes across loud and clear in the text version.

Does flying Air Force One to various locations on the planet count as using a "corporate" jet. Mr. Obama and his cronies need to realize that his administration is a failure and he needs to start blaming himself for the condition of the economy and work force!. His stimulus was a bust and only benefited banks and unions. I say that Congress needs to start impeachment proceedings against Mr. Obama. He's more worthless that "Mr. Peanut" — Jimmy Carter!

But the sad part about his lies is the fact that he gets in front of a large crowd and spill a lie about a mile long and the people don't have a clue if he is right or wrong so they just keep on clapping those hands.
I liked the one where the reporter was at a line at the election booth and he would call one to the side and ask a stupid question like do you think it was a smart thing for Obama to have Sarah Palin as his vice, and the would say yew that was a good idea, there were lots like that, just goes to show they don't have a clue what it is all about.
I think every one should have to take a aptitude test befor they can smoke I mean vote

I don't get this. If the "jet loophole" is only accelerated depreciation, how do you get a cost of $2B? Accelerated depreciation simply means that the company's get a bigger deduction now and a smaller deduction later; the total deduction over the years is the same. With current interest rates, there is basically no difference over the life of the asset.

It seems the president is more interested in fostering class warfare more than finding real solutions to the country's debt, deficit, revenue and spending problems. Allowing the Bush era tax rates to expire only for those making over $200/250K will bring in, at most, about $70B in annual federal revenue. At current spending levels and assuming a $1.5T annual deficit, that $70B represents only 4.6% of the deficit, an increase of $2.9% in current revenues and only 1.8% of current total federal government spending.

This is not a real solution to the problems currently faced and others need to be considered. Why, for example, has the president summarily dismissed the recommendations of the bi-partisan debt/deficit commission he appointed? That group represents a wealth of public and private sector experience, to my knowledge none of the members are running for elected office and they represent the closest thing to an honest and objective view of the problem as you'll find in Washington.

this is untrue. here is an accurate explanation of what is happening: http://www.nationaljournal.com/obama-s-taxing-cor…
the law is from 1987.
i notice how everyone else on this comment board has a theory about why this fake event is a great reflection of flaws in obama's character. it shows how much you just deep down despise our president. you seize on anything without checking to see if it's true. you spin it into a larger narrative and call him a clown.

Lewis – if the President actually told the TRUTH, the whole TRUTH, and nothing but the TRUTH, a majority of Americans would stand behind him and support his position. However, as we have been shown from Day I
this is a man who says whatever is required, even if known to be blatantly false, in order to get done what HE has decided should be the only answer to a problem, not the will of the American people as it should be.

If you think for one minute that any of us are enjoying this 2.5 year-old disaster, you would be WRONG!!! None of us take any kind of enjoyment or glee in knowing we have a President, and his administration, who is set on destroying the foundation of our country. And just for your information, it wouldn't make any difference to me what color his skin color is, what his sexual orientation is, how many degree initials he has after his name, or how tall or short he is. What matters to me, and most other Americans I am sure, is how well he listens to the American people, and if he goes about performing his duties in a manner respecting those who pay the bills and pay his salary.

“i notice how everyone else on this comment board has a theory about why this fake event is a great reflection of flaws in obama's character.”

Oh its much more than just that!
Round 2 or 3 in damage control!

You linked to an article written by Tim Fernholz, that would be Tim Fernholz of JurNOlist fame!
“Aug 13, 2010 – Tim Fernholz of the American Prospect, was an identified member of JournoList – an email group of approximately 400 "progressive" and "new media" activists.

JournoList members reportedly coordinated their messages in favor of Barack Obama and the Democrats, and against Sarah Palin and the Republican Party.”
Did you know that? Seriously JournoList, none of them have any credibility.

Do you know if this was the White House excuse before or after the “Communications director Daniel Pfeiffer used his official Twitter channel to direct followers to a blog post written by Media Matters, which he said “corrects @Heritage’s claim that the Dems created the private jet loophole that the GOP refuses to close.” ????

Obama when are you going to stop flying around in the largest private jet in America, along with his other half to stop using it for family fun. Lies and more lies is all this president knows. What a joke this guy is

Obama when are you going to stop flying around in the largest private jet in America, along with his other half to stop using it for family fun. Lies and more lies is all this president knows. What a joke this guy is

Didn't you see the new and improved jet Pelosi demanded when she was Speaker?
She said her family just couldn't all fit in the other jet she had been using.
She demanded and got a brand new spanking jet.
Wait until you google how much booze that freak went through yrly.
Ballpark the booze around 1/4 of a million dollars! No joke!
I say kick every marxist out of D.C. starting with the trains for brains Pres.

Obama is a pure political animal. He speaks to his constituencies and also tries to speak to the middle ground by making statements that probably sound sensible to a majority of voters assuming they are not thinking too carefully or listening to the real news. A crafty hence dangerous president.

FOR WHAT REASON?
He is of the utmost hypocritical amongst many other negative terms. Seems his day goes on picking achievers he draws negativity for resentment reactions in society.

"I think it's only fair, Mr. President, to ask you to step down and out of the private sector. Those personal achievers are careers and our children's incentive to prosper in their own lives on their own accord. Why do you ignore this, Mr. President. And take all steps to ensure a future unable to prosper in the free market? Being taken over by your control.

Obama: "it's not fair no other business enjoys this?" PATHETIC!

No other business "enjoys" this because your stimulus package didn't include any other business intentionally! Just a set-up to start your class warfare!

Why IS AMERICA putting up with this corruption and deception and immaturity of a grown adult, male? Ignorance doesn't consider all matters necessary and Obmaa leaves all consequences OF ALL HIS IGNORANCES on the innocent. Rich and poor tax payers alike.

I really think this guy has a major inferiority complex. Anybody that is mildly successful or has just a little bit too much disposable income MUST be punished. I just don't understand the insane jealousy and hatred he as for "rich" people. Years of wedgies on the playground have really broken this man's pysche.

He did have a moment of clarity and truthfulness yesterday. He said that some of the things he has fostered have not and will not set well with "HIS" voter base, basically the left and he is correct and he let out who really matters to him in America.

I don't dispise him, I dislike his policies and any of us offering his performance in a private sector job would be looking to become a politician…

THis is very frustrating that nobody reporting on the president's remarks seems able to say what the tax break actually is, although it's clear that several stories are outright wrong, such as those that say he was referring to "accelerated depreciation," which actually is most depreciation. I think it's so-called "eligible qualified property" for which owners can elect to forgo 50% first-year bonus depreciation in lieu of applying the amount to unrecognized AMT and research credits. Which seems hardly to be taking food out of the mouths of poor children. Neither is it the sort of thing most journalists apparently have the patience to understand and try to explain, alas.

Despite upholding our first amendment rights, such musings of government hypocrisy provide us with nothing more than the false transparency that is created by the many bloggers who serve to further muddle what has become an increasingly stagnant political process wrought with a misalignment of incentives. Such were the market creatures during the financial crisis who took advantage of short positions and fear mongering despite, in some cases, strong underlying fundamentals. What on the surface appears to be a service, or act of market efficiency in the shorter's case, is nothing more than a hypocrisy in itself. Countless are the hypocrisies of statements and fundamental views from either side of our political discussion.

Its time for taxes to be paid by the rich and big corporations. We have learned from the idiot President Bush that tax cuts lead to larger Deficits. The only President to take a budget surplus and make it a large Deficit. When Bush's Father broke with the Republican Party and raised taxes it created an economic boom for the Clinton administration which, President Clinton kept going.
Why should we do what Hoover did early in the great depression which was nothing. Taxes should be raise and 80% believe that the rich and big corporations should pay there share.
Every President that has cut taxes has left his successor with an economic mess. Reagan-Bush, Bush-Obama. Bush left Obama with an ECONOMIC DISASTER!!!

Tough times for you eh, Paul? You don't like the presidents that know your human dignity can stand you on your own two feet? Waiting for government to hand out freebies for you? The more government has of everyone's earned income makes you feel safer? Cause you feel living free and independent is just not what you want in your life so why not take it away from everyone else?

Name a specific, Paul. How is not raising the debt ceiling going to cause economic disaster? Here's my answer: GOVERNMENT WON'T CONTROL THEIR BEHAVIOR!!!!! There are plenty of socialist countries I'm sure would suit your needs. Why destroy freedom here?

You people are easily duped. Your Corporate Masters have decieved you again. The tax break at issue in the negotiations is a 1987 provision of the tax code that allows corporate jets to be depreciated over a five-year period rather than the seven-year period required for commercial aviation. This is not something Barack Obama created, not something Barack Obama has ever supported, and not anything that has anything to do with the stimulus bill. It is, instead, a small but real subsidy that distorts the economy at the margin by encouraging large firms to invest in corporate jets rather than paying for commercial airfare.

[…] What’s a good-hearted right-wing extremist supposed to do? Would Harry Blackmun have solved today’s debt ceiling crisis by cutting taxes or cutting LBJ’s great society[12][13]? Once Congress passes a law that taxes or spends, wild horses cannot drag the law from the US Code. Forget the third rail[14], no Congress no matter how far removed by commissions will ever touch it; try instead to imagine repeal of the tax deduction for health insurance[15], or accelerated depreciation for corporate jets[16]. […]

The goal was to trick corporations into buying corporate jets by promising a tax advantage (tax still needs to be paid but gets delayed under the stimulus). But any company silly enough to fall for this already made their purchase … so now Obama has nothing to lose by changing his rule. Seems "fair" to me. After all do we really want companies stupid enough to rely of Obam's word getting a tax break?

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